When exporting commodity to a foreign country, an importer needs to prepare documents including an invoice that has been sent from an exporter and to file an application for import-license with the customs of the importing country. Thus, the importer gets an import license and pay the customs duty.
When making an import declaration, the importer needs to classify the imported commodity according to the tariff rate table to determine the tariff code. The tariff rate table is subdivided systematically from major classification to minor classification. Every imported commodity needs to belong to one of the classifications. Assigning the imported commodity to a corresponding item of the tariff rate table is called tariff classification.
Although tariff codes are determined based on the international treaty (HS treaty), some tariff codes are different between the exporting country and the importing country. This difference is occurred because setting subdivision for the tariff codes in each country is permitted. For example, the tariff codes in Japan have nine digits whereas those in the United States have ten digits. This sometimes makes the tariff classification work difficult.
As an example, when exporting automobile parts from Japan to the United States, the exporter or customs clearance agent assigns tariff codes to the parts, prepares an invoice for the details of the parts and exports the parts after clearing the customs in Japan. When the parts arrive in the importing country, staff member of the exporter's firm or the customs clearance agent takes an import application with the customs of the importing country.
Because the tariff codes are subdivided, it is difficult for the person whose knowledge about the parts is poor to select a correct tariff code. For example, assume the part name is a pipe, the tariff code may be different depending on its length and whether it has a bush or not. In the example described above, the customs clearance agent may determine the tariff code based on mainly the name of the part. The agent may select a wrong code or assign different tariff codes to the same part. When the error of the tariff code is discovered at the customs of the importing country, the importer needs to take a correction procedure for correcting the tariff code, which may incur stay of the part at the customs, or hindering quick import into the importing country. Furthermore, when the amount of the customs duty to be paid is wrong due to the error of the tariff code, the importer would be charged with a penalty.
Therefore, there exists a need for a database system which enables quick retrieval of a proper tariff code.